Disengaged workers cost the U.S. economy $350 billion a year in lost productivity. Here’s how the happiest companies boost morale and the bottom line.

“Being able to be truly happy at work is one of the keys to being happy in life,” says Heidi Golledge, CEO and cofounder of CareerBliss, an online career database. And what company couldn’t use a little more joy among its ranks?

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In her book It’s Always Personal, Anne Kreamer points to recent research from Sigal Barsade of the Wharton School of Business that indicates positive moods prompt “more flexible decision-making and wider search behavior and greater analytic precision,” which in turn make the whole company more willing to take risks and be more open. On the flip side, analysis conducted by the Gallup Organization found that disgruntled employees disengage and cost the American economy up to $350 billion a year in lost productivity.

Happy employees don’t stay in one role for too long. Movement and the perception of improvement create satisfaction. Status quo, on the other hand, creates burnout.

There is a strong correlation between happiness and meaning; having a meaningful impact on the world around you is actually a better predictor of happiness than many other things you think will make you happy.

A workplace is far likelier to be a happy place when policies are in place to ensure that people regularly get acknowledgement and praise for a job well done.

Recognize that employees are people first, workers second, and create policies that focus on their well-being as individuals.

Emphasize work/life integration, not necessarily “balance.”

What exactly makes those staffers whistle while they work? CareerBliss just released its findings on the 50 happiest companies in America. The data, based on employee-submitted reviews, evaluated the key factors such as work-life balance, one’s relationship with his/her boss and coworkers, work environment, job resources, compensation, growth opportunities, company culture, company reputation, daily tasks, and job control over work performed on a daily basis. The answer to what makes a happy company is an amalgam of all these different factors, which might indicate that companies perceived as innovative would consistently snag the top spots. Not so. Apple and Google dropped from their top 10 spots down to #42 and #18, respectively. Meanwhile, pharmaceutical giant Pfizer climbed from #11 to take the top slot, followed by NASA and the U.S. Department of Defense.

Steve McClatchy, founder of Alleer Training and Consulting, whose client list includes top-ranked Pfizer, says a happy workplace is one that is committed to perpetual improvement, and not just as a line item on the balance sheet. “It’s one that supports employees in achieving goals, letting them fail, and learn from that,” he says. McClatchy believes happy employees don’t stay in one role for too long. “When there is movement in your life, there is satisfaction. Status quo is what creates burnout and ruts.” He says at companies such as Pfizer, staff achieves a balance between improvement, growth, and maintenance. Work burnout isn’t about too many hours spent on the job, he contends, it’s about feelings that come from improvement, or lack thereof. McClatchy points out that Pfizer regularly checks in with staff through employee surveys. “It’s a commitment to finding out obstacles to being happy. They don’t wait for exit interviews; they are proactive and continually assess their culture.” McClatchy believes a happy workplace isn’t necessarily free of conflict, either. At Pfizer, he says, management addresses conflict constructively. “It’s not with discipline but an approach that is solution-oriented.”

Work burnout isn’t about too many hours spent on the job, it’s about feelings that come from improvement, or lack thereof.

Another way to reduce grumblings is to cultivate a culture of mindfulness and meaning, according to Jennifer Aaker, General Atlantic Professor of Marketing at Stanford Graduate School of Business. “New research shows there is a strong correlation between happiness and meaning–in fact, having a meaningful impact on the world around you is actually a better predictor of happiness than many other things you think will make you happy,” Aaker says. “When we can cultivate mindfulness and meaning in all that we do, including our work, we have the opportunity to influence not only our own well-being, but also the well-being of our family, friends, coworkers, and wider community.”

Steven Cowart, manager for Visual Display Systems at NASA, agrees.
“The projects I get to work on are incredibly interesting, challenging, and critical to the success of an experiment or mission. The research facilities are unparalleled in their capabilities and the accomplishments they’ve helped achieve. The tools we get to work with are the best. Our simulators and trainers are like “E” ticket rides at entertainment parks. Especially the centrifuges. We get to do things I would never have imagined had I not been hired here. Things that matter. Things that inspire people. Things that change our perception of our life on Earth and our place in the universe.”

Not surprisingly, another part of joy comes from a simple pat on the back. Globoforce, a software provider of social-recognition solutions, said 82% of employees it polled said that receiving recognition makes them more satisfied with their jobs. “A workplace is far likelier to be a happy place when policies are in place to ensure that people regularly get acknowledgement and praise for a job well done, and where people feel that their happiness at work matters to their employers,” says Gretchen Rubin, author of the best-selling Happiness Project.

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Dana Stocks, head of HR for Philips North America, says that the company (ranked #25 on the CareerBliss survey) took this concept a step further to make recognition more personal. “Philips has come to understand that recognition for a job well done is often more meaningful when coming in the form of peer-to-peer acknowledgment than expected manager-to-peer rewards. As a result, Philips has put in place programs and ‘culture drivers’ that help individuals create a legacy that is meaningful and energizing, beyond cash bonuses or award vouchers,” he explains.

Two programs help to reach this goal. “We are Philips” is a peer-to-peer recognition program that highlights the accomplishments of fellow employees and how they are modeling the key values and behaviors. Three times per year, winners for each behavior are announced and then showcased throughout North America to inspire others to succeed. Stocks says Philips also uses social technologies to engage with employees like the app called Connect Us (available as a desktop app and for mobile devices) to unite its global workforce by sharing knowledge insights, collaborating, and publicly showing appreciation with Thanks badges. “Any employee can show personal recognition of colleagues’ achievements,” says Stocks. Virtual high fives are limited to five per week, and the boss gets looped in, too. “Managers of employees who receive a Thanks badge will be informed by email,” he adds.

As the director of happiness at Lamp Post Group, Shelley Prevost, PhD, contends that the happiest workplaces are the ones that seriously honor the humanity of their people. “When you ‘get’ that employees are human beings first and worker bees second, you say something about their worth. Companies with happily engaged employees laugh at the rules that are more about upholding policy than caring about the well-being of others. They hire people with a capacity to care for one another, foster connectedness at every level of the company, give an inspiring vision not laced with b.s. platitudes, but about real possibilities. You want to work in these places because they make you feel purposeful, connected, and valued.

That isn’t always tied to a paycheck. Staffing and recruiting agency Adecco ranked #16 on the CareerBliss survey, even though its average salary was in some cases up to $50,000 lower than the average paycheck at companies at the bottom of the list. “Our people have a tremendous pride in Adecco and what they do for a living,” says Mark Eberly, senior vice president of human resources, Adecco Group North America. “Especially in this economy, knowing that you are in the business of putting people to work is extremely gratifying, which no doubt makes for happy employees.” David Adams, vice president of learning and development, Adecco Group North America, adds that the agency gives employees opportunities for growth and flexibility. “Our commitment to professional growth includes developmental and skills training for both colleagues and associates. Additionally, we offer flexibility, including the many choices available to our temporary associates as to the times and duration they can work.”

One thing to keep in mind, says Delivering Happiness at Work’s CEO James Key Lim, one of the first employees at Zappos, is that there is no one magic bullet to guarantee happiness in the workplace. “We talk about work/life integration instead of balance,” he explains, especially when a study found that 90% of people send email on the weekends. By aligning people with their passions both on the job and in the rest of their lives, Lim says companies stand a greater chance of cultivating happy employees. “From an organizational perspective this really takes time,” Lim says, and clear, co-owned values are a must, along with consistent checks to ensure that everyone stays aligned. “The annual review is dead,” he asserts, “Happiness is a daily journey.”

What does your company do to keep you happy (or not)? Tell us about it in the comments.

About the author

Lydia Dishman is a reporter writing about the intersection of tech, leadership, and innovation. She is a regular contributor to Fast Company and has written for CBS Moneywatch, Fortune, The Guardian, Popular Science, and the New York Times, among others.